Danger zone: why war in the Middle East has landed the RBA’s inflation fight in tricky territory

AI Summary

The Reserve Bank of Australia is facing a more difficult inflation outlook as conflict in the Middle East adds pressure to the economy. The bank may respond more aggressively to keep inflation near its 2.5% target, but tighter policy could put economic growth and post-pandemic employment gains at risk.

The Reserve Bank appears ready to push harder against inflation but it comes with a greater risk for the economy The fight against inflation has entered a new, more dangerous phase. For years, the Reserve Bank has been attempting, as gently as possible, to steer inflation back to its 2.5% target while trying to retain as many of the post-pandemic job gains as possible. Continue reading...